The world of business is truly fascinating. Businesses provide a livelihood to the majority of the human race. Even farmers also depend on businesses to sell their products and get inputs for farming.
However, to most of us, the world of business remains a mystery. In this series of blogs, we try to unravel the mysteries of the business.
In this blog, we will learn about the ‘History of Human Capital Management.’
The concept of personnel development came into existence after 1800. Personnel management was concerned with the provision of employment, health schemes, and crèches for the lady employee’s children. After the Second World War and up to the 1950s personnel management covered a wider range of services, including salary administration, training, and advice on industrial relations, but the main focus was at the tactical rather than the strategic level. The increasing organizational size was responsible for a certain changes in industrial relation practices.
The 1960s and 1970s saw a significant increase in the number of staff engaged in personnel work. This could be attributable in part to an increase in the amount of employment legislation. However, the state of the economy had a part to play as well. In conditions of full employment, up to the early 1970s, there was evidence of much recruitment, selection, training, and payment system activities in the practice of personnel management. This was prompted to some extent by labor shortages and was reflected in actions to retain skilled labour and increase the skill levels of the work-force.
The thought of training was systematic and planned, heavily influenced by the establishment of the training boards, which exacted a training level from industry and offered grants to companies that conducted training to acceptable standards. In turn a rapid growth in the number of training specialists within the personnel function.
Welfare personnel was concerned with the provision of schemes, considered progressive at that time, dealing with unemployment, sick pay, and subsidized housing for employees. The introduction of these schemes could be viewed as a reaction to the harshness of capitalism at that period of British history.
Even today it can be recognized that the welfare tradition has some significance in the practice of personnel management, for example, health schemes and crèches for the children of women employees. Personnel administration amounted to support for management and was basically concerned with recruitment, discipline, timekeeping, payment, systems, training and keeping personnel records for future activities, such as performance appraisal (e.g management by objectives) and management development, forecasting manpower needs gained importance, (manpower planning) so that future growth can be maintained.
During this period the consequence of greater union influence was a substantial increase in the workload of the personnel specialists. The involvement of the personnel function in matters connected with industrial relations issues, and with productivity deals as well, elevated its concern to some extent to matters of strategic significance to the organization, at a time when most of its activities could be considered as tactical in nature.
The emphasis on industrial relations heralded a delicate role for the personnel specialist interacting with both the management and workers. This signaled a need to develop negotiation skills and to learn more about various systems of remuneration, and there was a tendency to identify the personnel function with management.
In the 1980s personnel management entering the entrepreneurial phase adapting itself to the market economy and enterprise culture. It was not uncommon to find senior personnel executives contributing to the debate within the company about future direction, the relevance of existing business objectives, and improved ways of achieving revised objectives.
A noticeable feature in the practice of industrial relations, in some but not all cases, was the shift in emphasis from work-force collective bargaining to centralized bargaining and in the process a reduction in the involvement of personnel managers. Weakness in the power of trade unions signaled the need for less elaborate processes in collective bargaining and conflict management. It culminated in swifter negotiated wage settlements. Also, organizations were better placed to make changes in work practices which resulted in increased productivity and a reduction in the numbers employed.
There were changes in personnel practices due to the large pool of available labor. For example, the emphasis switched from recruitment attracting candidates to selection. It was during the 1980s that the rise in HRM began to attract the attention of personnel practitioners. There was a move away from the traditionally adversarial industrial relations of the 1970s towards an approach that sought to achieve excellence in the organization through a committed work-force.
The post –entrepreneurial phase for personnel management in the 1990s is likely to embrace HRM as the standard-bearer, though some would argue that HRM will subsume personnel management. The early 1990s witnessed a change in emphasis. The reaction to individualism and unjustifiable greed of the 1980s is likely to make way for the spirit of consent and the value of teamwork.
There is a concern for core workers who are essential to the operation of the organization since high commitment is required from these workers. They are expected to be flexible about the hours they work and to work above and beyond their job descriptions. Wages tend to reflect the market rate rather than the rate determined by agreements with trade unions.
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